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tv   On the Money With Maria Bartiromo  NBC  March 18, 2013 12:30am-1:00am PDT

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any day of the week now. >> meanwhile, it is starting to sound the same, but in a good way. by thursday of last week, the dow had notched a ten-day winning streak, the longest streak since 1996. and each day upset a new all-time high. treasury secretary jack lew meanwhile says he doesn't think the markets are in a bubble right now, and that the economy is recovering. >> we still have a lot of work to do. but there doesn't seem to be any push to create a crisis over the debt limit or over shutting down the government. i think that's helpful. we've had economic data come out for quite a while now showing that we have a resilient economy that is growing. >> retail sales were growing. they came in better than expected for the month of february, rising 1.1%, the best numbers since september. analysts were concerned about the impact of gasoline prices and the increase in the payroll tax for us, but consumers are still spending money. important because that makes up about 70% of america's economic growth. and if you're looking for something new to buy, samsung will be happy to oblige.
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introducing its new galaxy 4 smartphone this week. the phone features a five-inch screen, a larger battery and a screen you don't have to touch, but just hover your fingers over. samsung is apple's main competition in the smartphone market. well, the markets setting new records almost every day, and the federal reserve meeting next week, what could happen next and what should you do with your money? joining me right now to talk than, randy kroszner is the former federal reserve governor and current professor at the university of chicago booth school of business. and jim mcaughan is ceo of principle global investors with $280 billion in assets under gentlemen, it's good to have you on the program. thank you so much for joining us. >> sure. >> so many stories to talk about. jim, every time the dow sets a new high, it's a new record. we have known corporate america is strong, sitting on all of this cash. but is this telling us now that the economy is stronger than we think, or is this just because the federal reserve has created an environment where there just are very few alternatives to
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owning u.s. stocks? >> i believe the reasons that the stock market has been pretty strong this year, and as you say, maria, been hitting new highs is that the u.s. private sector and the corporate sector in particular is in really good shape. the factors i would point to is here in the united states we have by global standards cheap and plentiful energy, both oil and natural gas, that we have innovation and productivity. the economy is currently producing at an all-time high level in terms of gdp. but with about four million, five million less people employed than before the recession. so the productivity and innovation in the u.s. economy have been very strong. >> so are you putting new money to work, then, jim? how are you allocating capital with all of this? >> i think the key point in equity is to have a plan, have a long-term allocation. you should be up to waiting u.s. equities. if not, you should be moving up. i think the preference for bonds
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that many investors showed over the last three years will no longer be rewarding because rates can go up as the economy improves. we have already seen that so far in 2013. >> randy, let's talk about the fed and all the other stories. of course, the federal reserve meeting next week. what do you expect them to do, to say? we know that they have pledged to keep interest rates low through 2015. do you think they'll do it? or do you think they should start winding back the quantitative easing of the qe3 sooner? >> well, we've had some more positive job numbers, but one good job number doesn't a new forecast make or a new fed policy make. the fed has seen this story before, unfortunately. we had false dawns in recovery in the labor market in 2009 and in 2010. the fed pulled back a little bit in each of those periods, and then the labor market faded once again. i think they're going to be really loathe to make that mistake once again. i think they're going to continue on the policy that they
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have. >> randy, let me get your take on the other big story of the week. of course, the federal reserve released a second part of the results of the so-called bank stress test this week, testing major banks' ability to return capital, testing their ability to handle a much worse economic situation and economic downturn. what did the results tell you that we heard from the federal reserve this week? >> well, the banking system is in a much stronger shape than when i was there during the crisis. if you look at each of the criteria that they have, how much basic core capital they have, core equity capital, the reason that's so important is because if financial institutions facing losses, that's the loss-absorbing piece. so if you have 5 or 6% who are equity capital, you can sustain 5 or 6% losses and still survive. in the old days, unfortunately, the capital ratios were much lower and certainly the crisis dramatically lower. so they're about double in many
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cases where they were. so we're by no means in a situation where we will never have a crisis or never have any problems. we can always have problems. but we're in a much better situation to be able to absorb shocks and losses than we were before. >> jim, what do you think about the banks? would you buy the bank stocks here, jim, or do you think they've had too big of a run-up? does this market have more room to run? >> yeah, i think the market has more room to run, but i don't think bank stocks are particularly attractive. i think the problem with bank stocks, as randy described, the banks are much safer. they've got a lot more capital. that means they have less potential to drive up the return on equity. so i would not be a particular buyer of bank stocks at this point. >> randy, let me ask you about the economy and sort of propping it up. >> sure. >> the fed has really carried the burden of propping up this economy, little help from the fiscal side. we know that this week we saw both paul ryan and the senate democrats introduce their budgets. both likely dead on arrival.
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but at the same time, the president met with house republicans. i want to get your take on what john boehner said after that meeting. listen to this. >> okay. >> i thought that we had a very frank and candid exchange of ideas. and frankly, i think it was productive. we know however, that there are some very real differences between our two parties like issues, jobs, balancing the budget what we need to do to get our economy moving again. >> randy, do you think there is any common ground here? will we ever see a compromise between the two sides? >> whenever i hear the phrase frank and candid, i know that means we completely disagreed, but at least we had a discussion. and i think that's a positive. i think it's very positive that both sides have now put down markers for what they think is important. i agree with you that both of those are going to be dead on arrival, but that doesn't mean that that's not going to lead to now some sort of discussions, negotiations.
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before it was just very, very vague, you know, one side likes this, one side doesn't like that. now there is something concrete to negotiate from. so we can potentially make progress from here. >> jim, it's interesting that the markets don't even care about what is going on in washington. they are ignoring the sequestration, the budgets being introduced. does it matter? >> yeah, it matters, maria, but right now i think the markets believe that washington is so bogged down that it can't do any more harm, that the sequestration, what it really is in market terms is a bit of fiscal tightening at a point when that's not a bad thing. >> gentlemen, great conversation. we appreciate you joining us today. thank you. >> thank you. >> great to be with you. >> my thanks to randy kroszner and jim mcaughan joining us. up next" on the money" we will walk down the yellow brick road with bob iger. what he says about mickey mouse, "star wars" and his business. finally, signs and spring. spring training under way. we're not playing around when it
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comes to big leagues big data. what connecting the s&p to mlb taught one former wall streeter about life, money and value. as we take a look, take a look at how the stock market ended the week.
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the royal treasure of oz. it belongs to you, but only after you defeat the wicked witch. >> well, "the great and powerful oz" is proving to be a great and powerful movie for disney. the film with an $80 million opening weekend. but the house that mouse built has a lot up its sleeves besides that, including the reintroduction of a favorite character, big news on "star wars," and the digital future. i spoke to chairman and ceo bob iger about building buzz with this latest hit movie. >> you hope that it does, yes. in today's world, word of mouth is a big deal. people hearing that a movie is a success is a great thing. you also want them to like it. that's very important too. but a weekend like that is a great thing. >> can we assume this will be
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another franchise that eventually includes dorothy, a sequel? >> too soon to tell, too soon to tell. >> let me ask you about another sequel in such a popular theme that is "star wars." a lot of talker around "star wars," particularly the old cast, harrison ford, luke hamel, carrie fisher. are they going to reunite? >> we haven't made any official announcement right now. we have a team working on the film right now. j.j. abrams is going to direct it. we have a writer who is actually writing the script, working with some of the folks that were involved in some of the earlier films. and when the story is quote/unquote broken, then we'll make decisions about the cast and move from there. >> what can you tell us about what is going on now in terms of advertising, in terms of the business climate? i guess the up-front period is beginning for some parts of media this week. do you have any vision that you could talk to us about in terms of advertising? how does the year look? >> we don't have a lot of visibility. it's been that kind of a market
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for a long time. i will say that the year has been fairly good. there is a fair amount of demand from advertisers for advertising time. and it's certainly a good sign. we've seen that fairly steady, at least since the beginning of the year. and that's pretty good for us, obviously. >> and the park's business? >> the park's business is the same, also stronger than it was a year ago. steady improvement. it means that more people are coming, and our pricing is holding up nicely as well. actually, our pricing has increased nightsly, quite strong domestically. >> and so much talk about worries over the economy, about the sequester. you sit on the president's export council. what went on in your meeting today? >> well, the president established the council that is made up of a number of folks from different businesses, including small businesses as well as large businesses. and the goal was basically to see what we could do as a group to improve the country's ability to export. because obviously, as we do that, we'll create more jobs and help this economy.
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and there has been a fair amount of progress made. i will say that the group has not only had a good dialogue, but has served up a number of really good ideas to the administration. that if they get behind can really end up stimulating the economy and creating jobs. i'll give you one. we talked a lot about travel and tourism to the united states. the more people that travel to the u.s., the better it is for the u.s. economy. so for instance, we talked about our visa policy. if we can do things to better facilitate people getting visas in different markets, then they will travel more. and we're seeing much greater demand for markets like brazil, india, russia, china to travel to the u.s. we make it easier for them to do that, then more people will come. so the president got behind this initiative wholeheartedly. they invested in the visa process in brazil, opening up more visa offices. more people are coming. particularly to florida, which we've seen that we benefit from. but so does the u.s. economy.
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>> bob, where does the growth come from at disney the coming three years? >> in our case it starts with creating intellectual property and experiences, and then leveraging that across multiple platforms and multiple territories. we benefit from technology making this great intellectual property available to more people more often more places. so the new platforms that we see will be mobile platforms. one example, a great opportunity for creators of intellectual property to reach people in new ways. also, we see great growth in the new franchises we have bought or we have created from pixar to marvel to "star wars." and of course outside the united states. we're seeing continued opportunity or growth in opportunity in the emerging world. >> let me wrap up on mickey, america's favorite character here. he'll be starring in a new series, a new series of short films that will begin rolling out in late june on the disney channel. >> we're announcing the creation of 19 new mickey mouse shorts.
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walt disney created the original mickey mouse shorts starting in 1928. the first release called willie. they depicted mickey as an innocent character, an every man of sorts, but someone that liked to have a lot of fun and someone that just entertained people. not just in the u.s. he is one of the most well-known character globally. over time we thought mickey lost some of those great innocent qualities, the vitality that people once saw in him. so we decided to bring him back, not that he has really truly gone away, but harkening back to what walt did with a collection of new shorts that depict him in the ways we thought people loved the most. >> my thanks to bob iger. up next, we're "on the money." it is springtime, and a young man's fancy is turning to thou
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can attention to details of our national pastime bring around a grand slam? my next guest used baseball to beat them at their own game. he turned what he knew about stocks to sports, a story he tells in "trading bases: a story about baseball, wall street and gambling." you made quite a career as a
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wall street trader. what made you start trading baseball for stocks? >> two years ago i was starting my 15th year as a trader on wall street. and i had worked for big investment banks, including lehman brothers for 13 of those years. and i figured that was going to be my career for a love lot longer. i was crossing the street by foot and got run over by an ambulance. the resulting injury curtailed my ability to work, and i was in a wheelchair and stranded across the country from my family. so stuck in new york, i needed something to take my mind off my inactivity and my boredom and my pain, and i really turned to -- i threw myself into the baseball season. >> amazing. you really turned something that could have been quite horrible into something good. so what did you do when you turned your attention to the baseball season? >> well, i started looking at baseball that spring sort of through the sabermetric lens, which we know from money ball now has somewhat of recognition as being the study of baseball statistics. i realized these were very similar to the bottoms-up models
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we created as traders to value stocks. and i started thinking like a trader. well, if i found a stock that was over/under valued, i knew i would sell or buy it. why don't i apply that same logic to baseball. >> fascinating. so what is the biggest indicator or data point you think that you look at for the talent on any given baseball team? >> look at the data and try to distinguish between past results and the actual skill sets of the players that produced those results. and in some cases, if they diverge, generally, the value of a team in terms of how las vegas is going to value them is going to be based on past results, not necessarily on the skill sets of the underlying players, which is more indicative of future results. similar to stocks. look, there are stocks that get overly popular and get ahead of their fundamentals. and they may become candidates to sell, even though they're good stocks, but they're just overvalued. >> so these are the same principles that you can look at when investing, when hiring people?
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>> certainly, i think so. and i think also the lesson is i really dove into baseball. what i found was it's interesting that even though major league baseball as an industry is worth just a fraction of the financial industry, i found that major league baseball, through using their data, does a better job of evaluating their employees in terms of looking at their skill sets instead of results than maybe the financial industry does. >> okay. so let me put that to the test. the 2013 season just around the corner, getting under way in terms of the spring training. opening day two weeks away. who is undervalued in your view? >> i think the tampa bay rays are undervalued and the cleveland indians are undervalued. those will be two great examples in the american league. and because they're undervalued, there should be somebody that is overvalued and i think it's the toronto blue jays. toronto signed all these flashy free agents and congratulate greatly improved themselves, but the underlying core, the change from where they're starting from, i think they're vastly overvalued and people are missing that it's the tampa bay
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rays that is the best core talent. >> all right. sticking your neck out with a program. thank you so much. joe peta joining us. up next, a look at the upcoming week and what will have an impact on the money. and for lovers of a certain snack cake, where you can find your twinkie fix following one delicious deal. back in a moment. stay with us.
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for more "on the money," go to our website, i hope you'll follow me on twitter and on google plus.
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look for @mariabartiromo. send me a tweet. now a look at the stories coming up in the week ahead that may move the markets and impact your money this week. earnings report out from fed ex, general mills and tiffany, among other. tuesday the housing starts telling us how many residential units began construction last week. on wednesday, the federal reserve's open market committee will wrap up a two-day meeting with a press conference from chairman ben bernanke. thursday, retailers will report on existing homes sold last month. and then on friday, the blackberry z-10 smartphone will be available to u.s. consumers. and for dessert, twinkies never go bad. bankrupt hostess brands has agreed to sell the iconic cream-filled confection. the $400 million plus deal would put twinkies, ho-hoes and dolley madison under the control of two equity firms. both have history with tasty
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turnarounds. metropolis purchased pabst blue rbi in 2010. a bankruptcy judge is expected to approve the deal this week, meaning twinkies could tackle store shelves by summertime that will do it for the show tonight. thank you so much for being with me. my guest next week liz ann sonders, the chief investment strategist at charles schwab. each week keep it right here where we are "on the money." have a great week, everybody. i'll see you next weekend. [ male announcer ] with citibank it's easy for jay
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>> this weekend on "extra." the new pope's surprising life before the priesthood. >> his ex girlfriend's new interview. >> his marriage ultimatum and his days as a bouncer. nicki minaj's "american idol" no-show. ryan ripped her for being late live on the air. >> keep that energy going for three of your four judges. >> should she be fired? now trending is america's most hated mom, casey anthony pregnant? >> popped up on some other guy's sofa eating chips. >> miley and liam calling off the wedding? did january jones break them up? and is jen aniston already married? >> i have all the latest on that. >> the bachelor's no sex until the wedding vow. is his future bride on board? plus -- >> he did the bachelorette, then the bachelor, now dancing and a tv wedding.
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everyone's wondering what this guy does for a living. handling as the reality star. >> and reuniting with jim carrey and this time he's got handcuffs. >> if we do that, you're coming to my place. >> and two victoria secrets angels live at the grove telling mario their best swimsuit secrets. >> i love the push up, i love that extra cleavage. >> i love that too. welcome to the grove. >> two big hollywood couples making news. >> coming up, the rumor jen aniston secretly wed, but first miley and liam done? oh, just a taste of what's now trending this weekend. >> his wandering eye. her wild child partying. eight months after their engagement, are miley and liam's i do's now we won'ts? >> everyone is like they're splitting up. >> the first sign of trouble? rumors that lm